December 17, 2014
Shipping Lessons from Christmas 2013
With the Holiday season in full swing, we figured it’d be a good time to revisit the fiasco that was last year’s Christmas delivery backlog. As a quick recap, shipping companies couldn’t keep up with demand during the last holiday season, resulting in an unknown number of furious consumers who didn’t receive their packages in time for Christmas.
Why did shipping companies fail to keep up with demand? Well, it’s kind of the result of a perfect storm:
- There were six fewer days between Thanksgiving and Christmas in 2013 than there where in 2012, resulting in a shortened holiday shopping season (FYI, the shopping season is only one day longer this year than it was last year).
- Severe weather in Dallas early in December created an early backlog that shippers never quite recovered from.
- An increase in the number of shoppers buying their presents online meant more packages in the system. Retailers experienced a paltry 4 percent increase in sales in 2013, while E-commerce companies experienced a 15 percent increase.
- Shoppers procrastinated buying their Christmas presents, while E-commerce companies promised quick and easy 2-Day shipping. During the last shopping weekend before Christmas, web sales jumped 37% from the year before.
What did shippers take away from this experience?
Well shipping companies learned one thing: they need to increase the capacity of packages they can ship! There are two ways of doing this:
- Buy a bigger fleet. Get more trucks and airplanes that can deliver packages.
- Increase the number of packages that can fit in the current fleet.
Now, you might be saying, “How can you increase the number of packages that can fit in the current fleet?” Well, that’s where the dimensional price increase—which goes into effect in less than two weeks—comes in. By punishing retailers for shipping oversized boxes, shippers are hoping to free up some of the space in their overstuffed fleets.
Our research has found that your average package is shipped with 40 percent empty space inside of it. Can you imagine what it would do for shippers if they had 40 percent more space to work with?
What can E-commerce companies take away from this experience?
We’ve previously made a comparison between E-commerce and fulfillment being like the real and digital worlds of the matrix. It’s easy to set up shop and make promises in the digital world of E-commerce. Heck, I dabbled in online entrepreneurship when I was a junior in high school. But things get a lot more complicated when you have to deal with real-world shipping, logistics, and supply chain. Most consumers, and even many businesses, don’t understand the complexities of today’s fulfillment logistics. This misunderstanding helped lead to a lot of the confusion and anger that customers experienced last year.
There are a few steps you can take to help ensure that your company doesn’t have a holiday shipping disaster.
- Incentivize your customers to buy presents early. Obviously, most companies are already trying to do this with Black Friday and Cyber Monday sales, but the incentive is sometimes weakened by e-retailers who extend their online sales throughout the entire month of December. Since the holiday season is such a critical time for retailers, it seems unrealistic to ask them to cut their holiday selling season short. More steps need to be taken, which leads us to our second recommendation…
- Give your customers realistic expectations. For example, USPS clearly displays the dates your packages need to be shipped in order to arrive on December 24th on their Holiday 2014 mini-website. And even then, they use cautious verbiage: “expected delivery” rather than “guaranteed delivery.” Let your customers know that the deadlines are rapidly approaching if they want their presents delivered by Christmas.
- Stay informed. Shippers like UPS offer time and cost calculators as well as tools to help businesses stay informed about network statuses and specific deliveries. Take advantage of these tools so that you can be know of when unexpected circumstances—like severe weather—will disrupt your supply chain.
- Use smaller packaging! This will be the last Christmas season where we will be able to ship boxes without incurred dimensional charges. Next year, a 12″ x 12″ x 12″ box will be charged as if it weighs a whopping 11 pounds! I can’t stress enough how urgently E-commerce companies need to look for smaller packaging solutions right now. But even without the looming threat of dimensional charges, shipping packages in right-sized boxes is just the Good Samaritan thing to do. It puts a lighter load on your shippers, causes less frustration for your customers, and is better for the environment.
If you would like to learn more about dimensional charges, and how Packsize can help you avoid them, download our latest white paper, Ready for the New Dimensional Weight Charges, by clicking the link below: